Crocs: Revolutionizing an Industry's Supply Chain Model for Competitive Advantage Case

Analysis

Based in the United States of America Crocs Corporation is a shoe manufacturer designer and retailer.

Started in the year 2002 by three founders, the core business of Crocs was to sell plastic clogs which were

made available in a variety of solid and bright colors which essentially had straps.

The business was an immediate success and word of mouth expanded the customer base to wide range of

people, from doctors to gardeners, who spent much of their day standing. Within only six years after the

launch of the products the company was able to generate millions of dollars in revenue

The success of the company primarily depends on two factors - the basic formula of Croslite - which is a

low cost, light and flexible material, constantly being used a base material for the products, and a highly

flexible supply chain. The vertically integrated supply chain of the company enables them to effectively

fulfill the customer needs and that too with an unmatched speed.

Apart from having a highly responsive and flexible Supply Chain, the company has numerous other

competencies as well, like their functional capabilities, their experience executives, & sales efforts, etc.

To begin with, their supply chain produced & supplied more products during the high sale season, when a

traditional supply chain could have achieved only a fraction of growth above the pre-booked orders.

Moreover, the production capacity is enhanced and adaptable which enabled the company to produce

extra goods in the high demand areas.

Since the small retailers had a significant portion of in the revenue, the company's ability to

service these small retailers added up to their strength. These retailers also helped in establishing the

brand by word of mouth publicity. Apart from this, he experienced executives also played an important

role in company’s success as they built the infrastructure that enabled the explosive growth.

The global capabilities of the company to establish strategized production units in countries like

China, Israel, & Canada Can we consider it as one of the key core competencies of the company.
Moreover, the motivated employees and the organization culture of ‘Can Do!’ contributed a lot in

ensuring the effective growth and profitability of the company.

Another quality of the company to design unique and comfortable products over a wide range

of variety enabled them to widen their target market and the customer base as well. Hence, this can be

called a key competency of the company.

For exploiting its core competencies, the company can go for any of the following alternatives-

Further vertical integration - This would enable the organization to have more control over the flexible

supply chain. It will also open doors for further investments in advanced production units and specialized

products as well. Moreover, the downward integration will ease the flow of accessing the in demand raw

materials. I believe this approach will benefit the organization most as it is most closely related to the core

competencies. The company already have a highly flexible supply chain with amazing control on global

operations, and this approach will utilize these competencies at it max to further aid in the company’s

growth. From small retailers to top tier executives, everyone will experience an ease of processing, as

new products can be introduced, and unimportant elements can be eliminated simultaneously.

Growth by Acquisition- This will not only enable the company to extend its product line, but also

improve the existing products by further innovations. This will thereby increase the efficiency of meeting

the constantly changing customer demands and help the company maintain an edge over the competitors.

Another benefit will be the diversified portfolio of the brand. Even though it relates to the core

competencies of the company, this approach is time consuming and expensive as well. Moreover, a major

acquisition can take away the interest of top executives from their core products and values, which might

create a disturbance in the organization and market as well. Thus, this approach should be avoided.

Growth by Product Extension- This will enable the company to explore new markets by

introducing a new product and hence there will be an opportunity to increase revenue and market share by

increased sales. This further eliminates the high dependence of revenue on one product, therefore mitigate
the risk occurred by changing market demands. The customer base will also widen by undertaking several

consumers which have various preferences, thereby strengthening the brand value. This approach will

also experience similar setbacks as that of acquisition, as this will shift the company’s attention to

diversified products and eventually weaken the brand image of a ‘Shoe Making Company’. Moreover, if

different products did not make it up to the consumer’s expectations, it will be detrimental to company’s

image and revenue as well.

Since the company is operating in consumer segment it should plan its production and inventory on the

basis of demands and needs of the consumer. Though the company is doing good with its – ‘Just in time

manufacturing’, it should have enough capability to regulate the production, storage and supply during

high sales and low sales period. This can be done by effectively planning the salesforce, deploying high

tech equipment, and a flexible supply chain.

All of these depends a lot on the gross profit of the company. As the profits grows higher,

company will be able to invest a lot more in the above suggested activities, further integration of supply

chain, and in innovative tech as well. Thus, production and inventory rely heavily on the gross profit of

the company.

Crocs has experienced tremendous success over the period of time, and it has a huge potential for

enhancing its growth. By proper consideration of all the discuss factors and effectively deploying the

supply chain vertical integration and maintaining its just in time manufacturing process I believe Crocs

will experience no trouble in enhancing the growth in domestic as well as global markets.